Question

Net capital spending is equal to:_________.

Answer 1

Answer:

a. ending net fixed assets minus beginning net fixed assets plus depreciation.

Explanation:

Net capital spending can be defined as the total amount of money being spent by a business firm or an organization for the acquisition of fixed assets such as equipment, plants or factory, property, vehicle, software applications etc in a specific accounting period.

Net capital spending is equal to ending net fixed assets minus beginning net fixed assets plus depreciation. Thus, a change in net fixed assets (ending net fixed assets minus beginning net fixed assets) plus depreciation is used to calculate the net capital spending of a business.

Mathematically, the net capital spending is given by the formula;

$N = (En - Bn) + D$

Where;

N = net capital spending.

En = ending net fixed assets.

Bn = beginning net fixed assets.

D = depreciation of the fixed assets.